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Russia and India signed a major arms deal on the sidelines of the BRICS summit in Goa this past weekend. The deal included four major components.

First, India becomes the second country after China to receive S-400 long-range air defense missiles. The agreement is for Russia to provide either 4 or 5 S-400 battalions to India. (Russian sources report the lower number, while Indian sources went with the higher one.) While a contract has not yet been signed, Russia signed a contract with China in 2014 to export four battalions for approximately $2 billion. The first systems are expected to be delivered in 2020.

Second, the two sides signed an agreement for India to purchase four Project 11356 (Admiral Grigorovich class) frigates. This agreement resolves the saga of the Project 11356 frigates that were originally ordered for Russia’s Black Sea Fleet but could not be completed after Ukraine refused to provide turbines for the ships in the aftermath of the 2014 conflict in Crimea and Eastern Ukraine. An agreement has been reached for Ukraine to provide the turbines for the ships as long as they are exported to India. According to Alexey Nikolsky of Vedomosti, one of the three ships will be completed at Yantar, while the hulls of the other two will be transferred to India and completed there. In addition, a fourth ship will be built entirely in India. The BMPD blog states that two ships will be completed in Russia and two built in India. It should be noted that India already operates six frigates of this type, which it calls the Talwar class. The total value of this agreement may be around $3 billion, which may include Russian assistance in the modernization of the HSL shipyard in India.

Third, the two sides signed an agreement for India to lease an inactive Akula-class multi-purpose nuclear submarine. India is already leasing a submarine of this class from Russia, the INS Chakra (formerly known as the Nerpa), which has been in the Indian Navy since 2012. Although the specific submarine to be leased was not mentioned, Russian contacts report that it is likely to be one of the Northern Fleet submarines currently being overhauled at Zvezdochka (Samara or Bratsk), rather than the hull that has been sitting incomplete at the Amur shipyard since the mid-1990s and has in the past been mentioned as a possible candidate for leasing to India. The agreement noted that the submarine is expected to be refurbished and modernized prior to transfer. Given the Indian Navy’s experience with the modernization of the INS Vikramaditya, I wonder what provisions about delays and cost overruns the Indian side will include in the contract.

This agreement signals that India has given up on leasing or buying a Yasen-class submarine. As I have indicated previously, Russia was most likely unwilling to provide its most advanced submarine to India, either because of its capabilities or because constraints on the number of Yasen-class submarines that can be built in Russia would mean that providing such a submarine to India would result in delays in the procurement of Yasen submarines for the Russian Navy.

Finally, Rosoboronexport, Russian Helicopters, and the Indian company HAL have agreed to create a joint venture for the production of Ka-226T helicopters. According to the BMPD blog, the venture will buy 60 helicopters from Russian Helicopters and then assemble an additional 140 in Bangalore under license.

According to Konstantin Makienko of CAST, the total value of these four agreements is likely to substantially exceed $6 billion. The agreements show that although India has sought to diversify its suppliers for military equipment, it will continue to have a strong relationship with Russia in this field, particularly when it comes to hardware that it cannot receive from other suppliers (such as nuclear submarines and long-range air defense missiles).

I’ve fallen behind on reprinting my Oxford Analytica briefs. Here’s one from late January, on US-Russian competition in arms sales. This version is slightly different from the originally published version, in that I have restored some material cut due to space constraints.

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SIGNIFICANCE: India is the world’s largest arms importer and its primary suppliers are Russia and the United States. Although the two suppliers largely sell their weapons to different customers globally, Russian efforts to expand to new markets to compensate for declining sales to traditional partners will lead to increased competition with the United States in many parts of the world.

ANALYSIS:Impacts

The most likely new markets for Russian arms sales include South America, South-east Asia, Egypt and Pakistan.

Russian competition with the United States in arms sales will be limited to a small number of countries.

Defence firms offering technology transfers will have an edge in the Indian market.

For decades, Russia and the United States have been the largest arms exporters in the world. From 2009 to 2013, Russia accounted for 27% of total world arms sales, while the United States was just ahead with 29%.

Russian arms sales have been highly dependent on a few major customers, with India, China and Algeria accounting for over 60% of Russian purchases in the last five years.

US arms sales are far more diversified, with the top three customers (Australia, South Korea and the United Arab Emirates) accounting for under 30% of total sales.

Shifting markets for Russia

The main targets of Russian weapon sales have been shifting:

China

Sales to China have declined as Beijing pursues a programme of domestic manufacturing of advanced weaponry. Many Chinese designs appear to be based on reverse-engineered Russian imports, particularly in fighter aircraft.

Europe and the Middle East

Russia has already lost other markets in Europe where many former Warsaw Pact countries are shifting to NATO equipment. Conflicts in the Middle East and North Africa have halted major sales to Libya and Syria.

India

Russian military industry is also worried about potential declines in purchases by India, its leading customer. The Stockholm International Peace Research Institute (SIPRI) has reported that between 2009 and 2013 Russia supplied 75% of weapons imported by India. However, serious delays and cost overruns on major contracts, such as aircraft carrier Vikramaditya to India and Il-76 transport aircraft to China, have dented Russia’s reputation as a reliable partner for India.

As a result, Delhi has sought to diversify its arms purchases. India chose French Rafale fighters in its multi-billion dollar Medium Multi Role Combat Aircraft (MMRCA) fighter tender and purchased helicopters and transport aircraft, as well as ASW aircraft, from the United States. India chose the American C-130J Super Hercules transport aircraft over Russia’s Il-76 plane. Moreover, India is looking to be 75% self-reliant in defence production by 2020-25, which is likely to result in declines in foreign arms purchases from both Russia and the United States.

New markets

Russia is actively seeking to expand its arms sales in South-east Asia, particularly Indonesia and Vietnam. Both are looking towards naval expansion and have in recent years bought aircraft, combat ships and infantry fighting vehicles from Russia. It is also seeking to sell diesel submarines to Thailand and has signed a deal to supply transport helicopters to Pakistan.

Besides Asia, Russia has been actively looking for new customers for its arms in the Middle East. Russia has recently concluded significant contracts with Iraq for helicopters and air defence systems worth 4 billion dollars and Egypt for air defence systems worth 2 billion dollars. Negotiations are also under way for coastal defence systems, attack helicopters and MiG-35 fighter aircraft. Ten years after being forced out of the Iraq market by the US invasion, Russia has once again become a major supplier of air defence systems and helicopters to that country.

It has also signed an agreement expanding military cooperation with Iran, with officials discussing the possibility of restoring the agreement to sell S-300 air defence systems with a possible upgrade to the more advanced S-400 system. Such sales would not violate the existing international sanctions regime.

In Latin America, Russia has long had a reliable customer in Venezuela, which has in recent years bought missiles, tanks and armored vehicles from Russia. Russia is looking for new markets in the region and is hopeful of selling fighter aircraft to Brazil and Argentina. Russia has sold air defence systems to Brazil and hopes to develop a defence industrial partnership that might parallel its military cooperation with India.

Russian competition with the United States

Russia mostly seeks to sell arms to countries that are not able or interested in buying US weapons, either because the customer states are not partners of the United States or because the products are too expensive. Iran, Venezuela and China are not likely to become areas for competition in US-Russian arms sales. Egypt has turned to Russia in recent years because of a deterioration in relations with the United States in the aftermath of the 2013 military coup. Many African and South-east Asian countries choose Russian arms when they cannot afford US-made versions.

India, a large unaligned country with a high level of military expenditures, is an attractive target for defense companies from both countries. Russia is also hoping to make inroads into Brazil and Argentina, two countries that have traditionally bought the majority of their weapons from the United States and its NATO allies.

The sectors in which Russian weapons systems are considered equal or superior to Western equivalents include: air defence, fighter aircraft, helicopters, submarines and cruise missiles. These are the sectors in which Russia’s defence industry can compete with the most advanced Western suppliers, with weapons such as the S-300 air defence system, the Su-35 fighter jets and the Kilo class submarine being noteworthy. In other sectors, such as transport aircraft, drones, surface ships, tanks and armoured vehicles, the quality of Russian products is significantly inferior to that of the United States, and Russian exporters compete primarily on price.

US strategy.

International arms sales can offset reductions in US defence spending, helping to keep the US defence industrial base healthy. Arms sales also fit with the Obama administration’s goal of strengthening allies and partners so they can provide more security for themselves without relying on US support. The US government has revised its export control system and is trying to streamline the Arms Export Control Act to make arms transfers simpler.

The combination of high-level policymaker attention, steady reforms and a volatile international security environment has resulted in an increase in US arms sales, thereby accelerating the competition with Russia.

In fiscal year 2014, US arms sales worldwide totaled 34 billion dollars, up 4 billion dollars from the previous year and about three times greater than the pre-2006 average. By contrast, President Vladimir Putin yesterday announced that in 2014 Russia sold more than 15 billion dollars-worth of arms and that new signed orders stood at around 14 billion dollars.

Outlook.

The United States continues to dominate the defence trade with its traditional partners such as Saudi Arabia, the United Arab Emirates and Japan. Yet it remains committed to maintaining or expanding ties to countries that Russia is also courting, such as Brazil, Argentina, India, Indonesia, Egypt and Pakistan.

In 2014, the United States and India agreed to identify co-development and co-production opportunities as part of the US-India Defence Trade and Technology Initiative (DTTI). Industry sources report that surveillance UAVs may be the first batch of products sold.

Since these products would be of particular use to India, especially in patrolling disputed areas with Pakistan, the United States may expect to see greater competition with Israel, a major drone manufacturer, shifting the Indian market towards higher-end products, and perhaps leaving fewer areas in which the main competition is with Russia.

CONCLUSION: The Russian and US defence sectors will push for greater exports to offset constraints in the defence budgets of their own governments. India, with growing expenditures and skepticism about Russia’s reliability, appears to be opening further to the United States. Competition between the two manufacturers will also be seen in Latin America and South-east Asia, where the US ‘Asia pivot’ may help Washington win new customers.

This year, there were a lot of foreign defense ministers participating in the Moscow Conference on International Security. In fact, there were so many that the organizers had to take an unscheduled break as the conference running well over time, with Russian Defense Minister Sergei Shoigu notably absent after the panel resumed. In this post, I will summarize the most interesting of the presentations. Videos of all the plenary speeches are available on the Russian Defense Ministry website.

Not surprisingly, the first slot in this lineup was given to Chang Wanquan, the Minister of Defense of the People’s Republic of China. Minister Chang focused on the development of a multipolar world as the center of gravity in international affairs has moved in recent years. He noted that some countries (not mentioning the U.S. by name) have been trying to obtain absolute security, which has complicated the international situation. China has been promoting a comprehensive vision of global security, focused on the need for a fair international order, the idea that common development enables security, and the primacy of dialog and cooperation over threats and the use of force. He noted that the PLA has been focused on safeguarding national sovereignty and territorial integrity, as crises on China’s periphery have been causing insecurity for the country. He also mentioned the role of the PLA Navy in conducting evacuations from Yemen and Libya and conducting other humanitarian missions such as disaster assistance and providing medical help for the Ebola crisis in West Africa. He highlighted the need to commemorate the victory over Nazism in World War II and the steps that China has been taking to promote development through the AIIB Bank and various Silk Road initiatives. Minister Chang concluded with a discussion of new efforts to conduct military dialog and increase military cooperation between China and the United States as part of efforts to counter terrorist threats and violent extremism. The overall perception from the speech was of China performing a careful balancing act between supporting Russia as the conference host while telegraphing that it was not interested in getting involved in any kind of confrontation with the United States.

Panos Kammenos, the Greek Defense Minister, was the only senior military official from a NATO country to make a presentation. He began with a statement highlighting the strong ties between Greece and Russia based on spiritual and historical connections, as well as on the two countries’ joint fight against fascism. He mentioned the dangers posed by terrorism and by new asymmetrical and hybrid security threats. The financial crisis that has affected the European Union has led to an increase in instability. Traditional security problems have been joined by new threats, such as ethnic and religious conflict, mass migration, and the dissemination of arms to non-state actors. He argued that the greatest security threat is posed by terrorism and religious conflict in the Middle East and the role of Greece as the bastion of Europe in this area. In this context, he mentioned the significance of Greece’s Hellenic initiative to protect Christians in the Middle East. He concluded by noting that security cannot be divided into internal and external areas. The same terrorist groups are attacking both the U.S. and Russia, so there is no choice but to have both countries working together to resolve this crisis.

The Pakistani Defense Minister, Khawaja Muhammad Asif, highlighted the emergence of new security threats in the last years. He noted that the radicals of the Islamic State have created a transregional crisis that has heightened the danger of the fragmentation of the modern state order. Conflicts in Syria, Iraq, Libya, and Yemen can all be viewed as outcomes of failed regime change, the Arab spring and regional conflict. The old order in the Middle East is dying, while external powers are the only force preventing the emergence of a new order based on religious radicalism. Local extremists in Southeast Asia and Africa are losing foot soldiers to transnational groups such as the Islamic State and Daesh. The region needs a comprehensive social, economic, and political reform package that must be combined with ongoing military actions. 200 thousand Pakistani soldiers are currently fighting terrorists in northwest Pakistan. We need to compromise on principles to ensure that the conflict ends (referring to Charlie Hebdo and Muhammad cartoons).

The Iranian Defense Minister, Hossein Dehghan, started by describing ISIS as a global cancer that has support from foreign states. He blamed the United States and Israel for using these groups to change the strategic balance in the region. He made a very strong statement against Saudi aggression in Yemen, arguing that as a result in the future Saudi Arabia will face the same situation as Saddam Hussein did. He argued that Saudi Arabia has killed many civilians through its aerial bombing campaign and needs to stop supporting terrorism in the Middle East. The international community needs to stop foreign interference in Yemen. Iran, by contrast, is a factor for stability in the region. He then turned to U.S. cyber attacks on Iran and the role of the U.S. as a threat to international security. He proposed a multilateral cooperation initiative between Iran, Russia, China, and India against U.S. missile defense and other international threats. He highlighted that Iran is focused on the peaceful use of nuclear energy.

The North Korean Defense Minister, Hyon Yong Chol, did not pull any punches in his speech. He started by arguing that the U.S. is the greatest threat to world peace and has caused an increase in the risk of war on the Korean peninsula by its actions. He called the U.S. and South Korea a cancer, because they want to overthrow the DPRK and dominate northeast Asia in order to put added pressure on Russia and China. He called the 1953 armistice worthless and argued that North Korea has been threatened by a U.S. nuclear attack. Efforts to have dialog with the U.S. did not achieve any results as it became clear that the U.S. just wanted to eliminate North Korean nuclear weapons without creating a peace deal. “If we had peace, we would not need nuclear weapons.” If the U.S. were to suspend joint exercises with South Korea, North Korea would stop its nuclear program. Instead, the U.S. is trying to create an Asian NATO.

The Indian Defense Minister, Rao Inderjit Singh, highlighted that most nations have now given up some of their sovereignty to various transnational bodies, as the have recognized that traditional state instruments are not adequate to respond to modern threats. Non-state actors are becoming orchestrators of conflict. States can’t reign them in or are even tacitly encouraging them in some cases. Responses need to combine hard and soft power. Conventional wars have declined in recent years, as have civil wars. Now, multi-polarity is allowing old rivalries to reemerge. In addition, there are new forms of threat from resource scarcity and climate change. Armed forces have to be prepared to fight both high end threats and irregular warfare. Space, cyberspace, and even underground warfare are now part of the war environment and have to be taken into account. Rapid technological innovation will help wealthy states and local entrepreneurs of violence, while potentially hurting the middle powers.

Russia is the second-largest arms exporter in the world, behind only the United States. In the period 2009-13, Russia accounted for 27% of total world arms sales.

However, Russian arms sales have been highly dependent on a few major customers, with India, China and Algeria accounting for over 60% of Russian purchases in the last five years. Another 15% of Russian exports went to other Asian countries, primarily Vietnam, Indonesia and former Soviet Union states.

Russia is particularly hopeful of expanding its sales to Indonesia and Vietnam — which are both looking towards naval expansion, which have to date included systems ranging from aircraft to combat ships to infantry fighting vehicles.

The main targets of Russian weapon sales are gradually shifting. Sales to China, have been in decline for years as Beijing has pursued a programme of shifting to domestic manufacturing of advanced weaponry.

India

India has replaced China as Moscow’s main foreign customer. The Stockholm International Peace Research Institute (SIPRI) reported that between 2009 and 2013 Russia supplied 75% of weapons imported by India. However, serious delays such as the transfer of the modernised aircraft carrier — the Vikramaditya — have dented Russia’s reputation as a reliable partner.

Therefore, Delhi seeks a diversity of supply from sources including the United States and several European countries. This is evidenced in India’s preference for French Rafale fighters in the multi-billion dollar Medium Multi Role Combat Aircraft (MMRCA) fighter tender.

India’s MMRCA tender is for procuring 126 fighters to replace squadrons of MiG-21s. The deal will see France supply a number of aircraft fully built and ready to fly — while the remainder will be built under a technology transfer agreement by Hindustan Aeronautics.

Moreover, India is looking to be 75% self-reliant in defence production by 2020-25. It will also seek to become a weapons exporter and probably promote partnerships with Russia. The BrahMos Aerospace programme has been a particular noteworthy area of close cooperation between Russia and India with the creation of the BrahMos Supersonic Cruise Missile.

Pakistan

Pakistan may also provide a new opening for Russia. On November 20, Russia and Pakistan signed a military cooperation agreement, reportedly involving a deal for Moscow to supply 20 Mi-35 transport helicopters to Islamabad.

Middle East

Besides Asia, Russia has been actively looking for new customers for its arms in the Middle East. Russia has recently concluded significant contracts with Iraq for helicopters and air defence systems worth 4 billion dollars and Egypt for air defence systems worth 2 billion dollars.

Latin America

In Latin America, Russia remains hopeful of selling fighter aircraft to Brazil and Argentina. Russia has sold air defence systems to Brazil and hopes to develop a defence industrial partnership that might parallel its military cooperation with India.

Competitive sectors

The sectors in which Russian weapons systems are considered equal or superior to Western equivalents include air defence, fighter aircraft, helicopters, submarines and cruise missiles. These are the sectors in which Russia’s defence industry can compete with the most advanced Western suppliers, with weapons such as the S-300 air defence system, the Su-35 fighter jets and the Kilo class submarine being noteworthy. Russia can also be competitive in sectors such as tanks, armored vehicles, small arms, artillery, and small combat ships. These are sectors where Russian weapons are not as good as Western equivalents, but are generally significantly cheaper. This price difference has allowed them to be competitive in many countries despite lower quality and/or inferior characteristics.

Ukraine delays

However, Russian arms sales have largely depended on selling late Soviet designs, with new designs proving more difficult to manufacture. The freeze on military cooperation with Ukraine may lead to further delays as many Russian weapon systems depend on Ukrainian components and the transition to Russian domestic substitutes is expected to take two to three years.

Building a partnership with India is central to U.S. security interests in the Indian Ocean (IO). The United States seeks to work with India to promote stability in a region of rising commercial and strategic importance. U.S. policymakers view India as an “anchor” or “pillar” of stability in the Asia-Pacific. Given declining defense budgets, however, the United States will have fewer resources for its forces and partner capacity-building in this vast region. Envisioning India as a “provider of security in the broader Indian Ocean region,” the United States is naturally eager to pursue burden-sharing opportunities with India as a means to this end.

India for its part understands that the United States expects it to assume a greater leadership role in the IO and appreciates the importance of its growing economic and naval capabilities. In 2010, then-Foreign Secretary Nirupama Rao spoke about the growing view that “a robust Indian naval presence is seen as a necessary contribution to a cooperative regional security order” and discussed “the cooperative burden-sharing of naval forces to fight piracy off the coast of Somalia” as an example of India’s contributions to IO security.

This report examines the potential for the United States and India to coordinate on the provision of security assistance and capacity-building in the IO as a form of security burden-sharing. We examine the South Asian littoral countries of Bangladesh, Sri Lanka, and Maldives. At present, though, U.S.-India burden-sharing in the Indian Ocean is only notional as a logical next step in the U.S.-India strategic partnership. U.S.-India coordination on security assistance to Bangladesh, Sri Lanka, and Maldives would represent an important change to the approaches and tools in U.S. and Indian relations with these IO countries. It would also be a new aspect of U.S. bilateral and military-to-military relations with India.

And here’s the conclusion to the three part series on Russian-Indian defense cooperation, written last summer. New posts return next week.

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Joint Projects

In addition to purchases, Indian and Russian defense industries are working on a range of joint projects, some of which have already resulted in very successful products. As India increasingly shifts from importing to domestic manufacture of military hardware, joint production is likely to replace sales as the main driver of Russian-Indian defense cooperation.

The BrahMos supersonic cruise missile is considered by some experts to be the fastest and most accurate cruise missile in the world. It has a range of 290km, can be used against ships or land targets, and can be launched from ships or land. Air and submarine launched versions are currently under development, with a design complete for Russia’s Amur diesel submarine. The missile is currently in service on Indian frigates and destroyers, as well as in the Indian army on mobile launchers. The air version will be installed on Indian aircraft by 2012. A faster and more accurate BrahMos II missile will be ready by 2014 and will be installed on the Kolkata class destroyers. It will be capable of speeds up to Mach 6. BrahMos version III, designed to be highly maneuverable and capable of steep dives, is currently under development. The BrahMos is not currently used by the Russian military, though version II may be equipped on the next generation Russian destroyers (project 21956) that are currently being designed. It is available for export, with Chile, Brazil, South Africa, Indonesia and Malaysia involved in negotiations for a potential purchase.

A project to jointly develop a multi-role transport aircraft is in initial stages, with costs being split evenly among Rosoboronexport, UAC, and HAL. A joint venture was registered in India in December 2010. Developers believe that a prototype aircraft may be built in 6-8 years. It will be modeled on the Il-214, with a range of 2500km and a payload of up to 20 tons. The goal is produce around 200 aircraft, with 30 percent available for export.

India’s HAL is cooperating with Sukhoi on the development of a new fifth-generation fighter aircraft, which is slated to join the Russian and Indian air forces in the second half of this decade. This plane will be highly “stealthy” and highly maneuverable. Its top speed will exceed 2000 km per hour, with a maximum range of up to 5000 km. Its ability to take off and land on short runways make it a potential candidate for the development of a carrier-based naval version. A contract to produce a joint design for a two-seat version of the plane was signed in December 2010. The contract calls for Russia to procure 200 single-seat and 50 twin-seat aircraft, while India purchases 50 single-seat and 200 twin-seaters. HAL is to design the computer and navigation systems and most of the cockpit displays. It will also modify Sukhoi’s single-seat prototype into the twin-seat version. Currently, three single-seat prototypes are undergoing flight tests in Russia and may join the Russian air force as early as 2013. The Indian prototype is expected to be ready by 2015. The total value of the joint project is estimated at over $35 billion.

Future Prospects

Military cooperation between Russia and India is obviously very strong. The partnership has moved beyond arms sales and licensing of Russian designs for production in India to joint ventures that promise to link the two countries’ defense industries into close cooperation for the foreseeable future. At the same time, some recent problems with the relationship may be a harbinger of a long-term decline in Russian arms sales to India. The delays and cost overruns that have plagued the conversion of the Admiral Gorshkov aircraft carrier into the INS Vikramaditya have been the most significant source for Indian complaints in recent years. The problems seem to have been worked out and Indian navy officials have recently stated that they have no complaints at this point.

At the same time, there have been problems with the timely provision of spare parts and resulting difficulties in repairing and servicing Russian-manufactured equipment by the Indian military. For example, half of India’s upgraded MiG-21s, which were modernized between 1996 and 2006, are already in disrepair and the backlog at Russian repair facilities has led the Indian air force to decide to cannibalize some of its existing aircraft rather than having all of them fixed. As a result, the modernized MiG-21s are to be retired by 2018, rather than the originally planned 2025.

The reform of the Russian military has also caused some problems, including the recent and sudden cancellation of the Indra-2011 military exercises that included both naval and ground forces components. It appears that these exercises were canceled because of organizational chaos in the Russian military. In addition, the Russian air force has so far refused to conduct joint exercises with India, possibly because of fears that Indian pilots flying Russian-built aircraft would outperform their Russian counterparts.

India’s desire to maintain a diverse set of suppliers has recently had some negative effects on Russian suppliers. Most significantly, the MiG-35 was not included among the finalists for India’s medium multi-role combat aircraft competition. Since this loss leaves MiG with no guaranteed orders for the MiG-35, it is now unclear whether this jet will be built at all. Similarly, India recently decided to purchase six C-130 transport aircraft from the United States, rather than Russian Il-76 planes.

Finally, whereas in the initial stages of its military expansion, India was focused on procuring armaments that were cheap and easy to use, its foreign purchases are now largely limited to the most advanced technology. Simpler weapons and platforms, such as smaller ships and aircraft, are now largely built in India either to domestic designs or under license from foreign designers. As a result, Indian demand for foreign military hardware is likely to shrink over time. If Russia is to remain competitive on this shrinking market, it will have to provide its most advanced equipment and to expand joint design and production. The fact that it has been willing to do so with the Su-30MKI and T-50 fighter jets is a sign that Russia greatly values its partnership with the Indian military. India also values the partnership, since Russia is the only country currently willing to jointly develop military hardware with India. So despite the above-mentioned bumps in the road, it seems likely that Russian-Indian defense cooperation is likely to become stronger over the next decade.

Here’s part 2 of the piece on military cooperation with India from last summer. Look for part 3 (on joint projects) next week, as well as an update on recent developments (which include the failure of the Mi-28 in the helicopter tender discussed below).

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Aircraft

The vast majority of fixed-wing aircraft and helicopters operated by the Indian air force were purchased from Russia. These include 121 Mig-21 Bison, 69 Mig-29 Fulcrum, and 157 Su-30MKI fighter aircraft, 145 Mig-27UPG ground attack aircraft, 105 An-32 medium transport aircraft and 24 Il-76 heavy transport aircraft. The air force also operates three Il-76 aircraft equipped with Israeli EL/M-2075 Phalcon AWACS systems and 6 Il-78MKI aircraft fitted with Israeli refueling systems. In addition, the air arm of the Indian navy operates 8 Tu-142M and 5 Il-38SD maritime patrol aircraft. The latter aircraft, three of which were originally purchased 30-40 years ago, were modernized over the last 10 years.

In 2008, the two countries signed a contract to upgrade existing Mig-29s, in service since the 1980s, to the Mig-29SMT standard, at a total cost of $964 million. The first four aircraft will be upgraded in Russia, while the other 58 will be overhauled in India with the assistance of Russian experts. During the overhaul, which will be completed by 2013, the planes will be fitted with advanced avionics, new multi-functional Zhuk-ME radars, a new weapon control system, new armaments, and revamped engines. As a result, the lifespan of the aircraft will be extended by 25-40 years.

The Indian navy has ordered a total of 45 MiG-29K carrier-based fighter aircraft, to be used on the Vikramaditya and the indigenously built Vikrant. An initial 16 planes were ordered in 2004 as part of the Admiral Gorshkov/Vikramaditya deal, with delivery initially scheduled for 2011-12. The first five planes were transferred to India in early June 2011. In January 2010, the Indian navy ordered an additional 29 planes for the Vikrant at a cost of $1.5 billion. Together with a future naval variant of Hindustan Aeronautics Ltd.’s (HAL) Tejas planes, the MiG-29s will thus form the core of India’s naval aviation for the foreseeable future.

India has been purchasing fighter jets from Sukhoi since the mid-1990s. An initial contract for 50 Su-30 jets was signed in 1996. Four years later, HAL signed a $4 billion contract with Sukhoi to assemble from kits 140 Su-30MKI fighter jets. Since then, it has signed two further contracts for an additional 58 aircraft, worth a total of $2.4 billion. Eighteen of these planes were received in 2007 and 2009 in trade for an equal number of older Su-30K and MK aircraft that had been in service since the late 1990s. The other 40 were received in 2008-10 and included 20 finished aircraft and 20 assembly kits. The planes received in the first phase of deliveries are to be modernized, with 40 planes to be upgraded with new radars, avionics, and BrahMos supersonic missiles. The project will begin in 2012 and will be carried out by HAL at a cost of $2.34 billion with assistance from Russian experts.

A contract for another 42 planes at a total cost of $4.3 billion was negotiated in 2010. These planes are to be delivered by 2018. Their high unit cost, compared to previous units, has sparked rumors that these planes would be provided to India’s Strategic Forces Command and would be designed to carry nuclear weapons. These rumors have not been confirmed to date. Thus, by the end of this decade, the Indian air force plans to have a total of 270 Su-30MKI fighters in service at a total cost of around $14 billion, making it the dominant aircraft in its fleet. Furthermore, Mikhail Pogosyan, the head of Russia’s United Aircraft Corporation (UAC), has stated that India might purchase an additional 200 Su-30s in the foreseeable future.

Other potential future aircraft sales to India include naval reconnaissance planes, where the Russian Be-200 amphibious plane is a finalist along with the Canadian Bombardier Q-400 and the Swedish Saab-2000. The United Aircraft Corporation’s Il-78 is a finalist (together with the EADS A-330) in a tender for refueling planes for the Indian air force.

The Indian military is also one of the largest customers of the Russian Helicopters Corporation. The air force currently operates 260 Russian-made helicopters, including 4 Mi-26 heavy transport helicopters, 68 Mi-8 and 156 Mi-17 utility and transport helicopters, 5 Mi-25U training helicopters, and 7 Mi-25 and 20 Mi-35 helicopter gunships. The navy operates 5 Ka-25 multi-purpose helicopters, 18 Ka-28 ASW helicopters, and 9 Ka-31 airborne early warning helicopters. An additional 9 Ka-31s and 8 Ka-28s are under contract for future delivery.

India has been systemically replacing its aging Mi-8s and Mi-17s with upgraded Mi-17s. An initial contract for 80 armed Mi-17-V5s was signed in 2008, 59 Mi-17-1V transport helicopters were purchased in 2010, and a contract for another 80 Mi-17-V5s was signed in June 2011 at Le Bourget. The first four helicopters were delivered in September 2010, with further deliveries anticipated over the next five years. Russian Helicopters Corporation is also hoping to receive a contract to modernize 108 Mi-17s for the Indian army and 15 Ka-28s for the navy.

Russia has made the short list for all four helicopter tenders being conducted by India, which include the following:

1) A $2 billion tender for 197 small utility helicopters for the army, where the competition is between the Ka-226T Sergei and Eurocopter’s AS-550 Fennec;

2) a $600 million tender for 22 attack helicopters, with the Mi-28NE Night Hunter and the AH-64D Apache Longbow still in the running;

3) the Mi-26T2 is competing with the CH-47F Chinook in a $700 million tender for 15 heavy transport helicopters; and

Decisions on at least some of these tenders are likely to come later this year. If Russian Helicopters is chosen for at least one of these deals, it will increase its credibility for exports to other countries and potentially spur further foreign sales.

Ground Forces Equipment

Several years ago, the Indian army chose the Russian-made T-90 as its main battle tank. An initial party of 310 T-90S tanks had been purchased in 2001 and received by 2006. In 2007, it bought an additional 347 upgraded T-90Ms, which are being assembled in India under license. Another 1000 T-90M tanks will be built locally over the next ten years. The Indian army also operates almost 2000 older T-72 tanks and 1500-2000 Soviet-made BMP-1 and BMP-2 armored vehicles.

A significant percentage of the Indian army’s artillery and missile systems are also Soviet or Russian-made. The most significant items include the Tunguska and Shilka self-propelled anti-aircraft guns, Smerch and Grad multiple rocket launchers, as well as a range of tactical surface-to-air missile systems that includes the Strela, Osa, and Klub. The Indian Army also operates the S-200 and S-300 strategic SAM systems. However, India has no plans to make additional purchases for its ground forces from Russia, as it increasingly shifts to domestic military production.